tv World Business WHUT December 7, 2010 6:00pm-6:30pm EST
>>abirached: this week on world business... >>tilting towards windmills, egypt embraces renewable power to help meet its energy shortfall. >>our strategy is to reach 20% by the year 2020 from the renewable energy. >>an interesting overseas investment model for italian companies. >>the objective of the mission is to increase the trade between italy and the united arab emirates which is already five billion euros but we can do much more. >>could japan's policy of propping up its tiny farming community with huge tariffs, be damaging its international competitiveness >>what you have are a lot of small, inefficient and uncompetitive producers.
>>abirached: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. egypt's economy has been expanding at over five per cent a year for more than half a decade. just before the financial crisis hit, annual gdp growth had reached over 7 percent. this boom has brought with it new challenges - not least the ability of the country's creaking power infrastructure to keep up the pace. >>reporter: last summer, during ramadan, some parts of egypt's up market residential districts experienced a new sensation.
>>taha: electricity was cut out maybe 2 to 3 hours in some parts of the city, high net worth parts of the city ... >>reporter: the government's response was to promise to build more power stations, four of them nuclear. >>abubakr: the government forecast in the next 17 years is to add an additional 55 gw so to triple the actual capacity in 17 years. >>reporter: nuclear is expected to provide the majority of this new energy but egypt, with its limited supply of hydrocarbons, also plans to bring more renewable energy into the grid. >>el rahman salah el din: executive chairman, new and renewable energy authority, egypt our strategy is to reach 20% by the year 2020 from the renewable energy, twelve per dent will be from wind and eight per cent from the other sources like solar, hydro etc. >>reporter: that's a lot to achieve in a decade and renewable energy, with the exception of the hydroelectricity generated by the aswan high dam currently accounts for under one per cent of the country's power. many experts are skeptical that the goal can be met, although
most agree though that there will be some increase. >>abubakr: we do expect by 2020 that if we reach 7 per cent or 6.5 per cent that will be quite an achievement. >>reporter: and the main area of focus ..., given that the aswan high dam's power /potential has already been maximised, is wind. >>abubakr: we have a wind speed of 12 meters per second to 14 meters per second which to international standards is not of course close to what is happening in the north sea of 15-16 meters per second but 12 meters per second is quite a decent amount. >>hallouda: there is excellent potential for wind, mainly close to the red sea coast and also thereare some places around the nile valley and in the oasis desert. >>reporter: the country's wind farms currently produce over 500 mw of wind power. more is to come including, when the tender has been
awarded, 250mw from the country's first private wind farm. another, for 1000mw, is also in the pipeline. to some though the process is taking too long. >>abdel salam: the competitive bidding is a process of almost three to four years and the wind industry this is unacceptable because one of the big advantages of the wind industry is that from the day you decide to start a wind farm to the day you have it running could be down to one year and this is the beauty of this industry - its fast so now we are slowing it down with competitive bidding. >>reporter: solar power also has serious potential for growth in egypt with sun shining for over 350 days a year. >>hallouda: you know egypt has 95% desert and the desert areas are large and we are in the sun beltgeographically so there is huge potential for solar >>reporter: as technology develops so the price of solar is expected to decline.
but one thing the egyptian government could do to speed up that process is to reduce the amount of subsidies it currently provides for traditional power generation. >>abubakr: we can say that roughly the total cost to the government, with the transmission and everything is around 4.5 to 5 cents per kilowatt hours so you can see that the subsidy is about 40% moreat this stage. >>zahran: if you're looking at economic studies that are only five of six years old, five or six years in the future, then it doesn't make sense because fuel is strongly subsidised, but if you look at it for 25 years which is the lifetime of most of the renewable energy equipment; then yes it does make sense >>reporter: the government says it is in the process of removing these subsidies. >> rachid : today for 74% of our industry has zero subsidies in terms to energy and this is what islabeled to be heavy energy consumers like cement and steel and fertilizers and petrochemicals and
so on and these are industries that don't enjoy any subsidies at the moment; for the rest we have a plan that by the end of 2011 there will not be any subsidies left. >>zahran: there are talks now in government to remove the subsidies and this is definitely encouraging people to invest in it. it's no longer something futuristic. >>reporter: another area the government intends to promote renewables is by offering producers fixed tariffs for their power - essentially promising companies a fixed profit on the energy they produce. >> rachid : one of the most important laws is what is called the feed in law which guarantees and provides clarity for the producers how they can connect into the national grids and how they can get the rates and this exactly the law that's sitting in with the parliament at the moment but we are confident we will pass it. >>reporter: one day oil and gas will run out, and not just in egypt. there is
a direct correlation between the closer we reach that moment and the more focus being paid to renewable energy. it will play a significant role in powering the planet. it's only a matter of time. >>abirached: italy is sometimes included in the group of failing european economies along with portugal, greece, spain and ireland. but is this inclusion justified? italy is weathering the debt crisis better than many other eurozone economies, buoyed by strong exports and overseas business. this strength also looks set to get another boost, thanks to a novel business model tapping into increasing demand for italian products in emerging markets. >>reporter: if the ferrari racing car didn't shine at this year's abu dhabi grand prix, it certainly glitters at ferrari world, a new theme
park next to the track. >>this tourist attraction is an attempt by the emirate to diversify its economy away from natural resources. >>and is the same reason why an italian government mission made a recent visit -- bringing over 300 businesses and banks -- in pursuit of new opportunities. perhaps a bit later than other big europeaneconomies already tapping into emerging markets, italy is now making a major effort to increase trade and investment with the gulf. >>marcegaglia: the objective of the mission is to increase the trade between italy and the united arab emirates which is already five billion euros but we can do much more and also the objective is to raise the investments, italians here and the emirates in italy. >>reporter: the focus for brand italy has traditionally been sectors like fashion, food and furniture, but the country does have other strengths... >> basevi de alcubierre: made in italy is still very much appreciated, not only from the fashion point of view
but also from a technical point of view. >> romani: we are the second largest manufacturing country in europe. we are the fifth world economic system so we are obliged to look everywhere: to the east, to the west, to the north and to the south. >>reporter: a stagnant europe is forcing businesses to seek out destinations where there's economicgrowth from india to indonesia - as well as the middle east. >> lanna: there are important italian companies working here in abu dhabi to implement contract works such as three lane highways or the second line of the underground. this is because italy has a long tradition of innovating technologies and the capability of producing new manufacturing instruments.
>>reporter: and a history of dependence on exports, more vital than ever considering italy's growthof only 1.1 percent. the backbone of the economy is smes which give the country a breadth of skillsand economic stability, but often lack the sheer size to compete abroad. >> lanna: many italian smes have lots of difficulties, in terms of critical mass, to survive and compete in international markets. >>o'daly: the italian economy is hugely dependent on smes. the challenge for those companies is toexpand into dynamic emerging markets where the growth rates will be more sustained than in italy's traditional markets in western europe and the us. >>reporter: that's why the ministry for economic development, through simest, a development financeinstitution offers technical and financial support. acting as a combination of investment bank and export promotion agency it can take up to a 49
percent stake in an overseas italian company. it has approved more than 1000 projects; the total investment, including contributions from entrepreneurial stake holders has now reached 24 billion euros. >>d'aiuto: we have very important activity in participation in joint venture, also direct investmentabroad. we own participation with simest trough the capital, through the equity. we manage also a venture capital fund, a public venture capital fund. >>reporter: supporting firms like iguzzini, a 40 year old family run business specialising in high-end lighting with a 167 million euro turnover. five years ago it set up in china, with simest taking a 25 percent equity stake, allowing the firm to establish a production plant that now supplies the whole of asia.
>>guzzini: the company aimed at international market since the beginning. we wanted to be leader initaly but we also wanted to set up on international market because we knew that to be an industry we needed to have international recognition. >>reporter: from high-end manufacture, to haut-couture - kiton, an italian tailoring firm from naples, has now gone global with 30 overseas stores from just off saville row to seoul. the expansion inkorea in part funded by a significant investment from simest. .>>paone: you have to go all over the world just to be always up, because you may expect a crisis in a market and you are already well established in another market. >>subacchi: if you look at the fashion sector textile we have a lot of very small
companies, no house names because again there is no big money behind to engineer a huge marketing campaigns but they produce extremely good top of the range products. >>reporter: a good brand may work for small to medium enterprises at home, but expanding overseas in uncertain economic times takes a lot more investment -italy may have just come up with an interesting solution. >>abirached: still to come on world business... >>why one of the world's biggest food importers continues to heavily subsidize its inefficient farmers. >>and we meet the masters of crazy golf as they battle for the world >>championship title. >>small scale but still serious.... and the rest in just a moment on world business...
>>abirached: japan's agriculture sector accounts for a tiny fraction of the economy, yet has alwayswielded enormous clout over the japanese government. farm policy has in many ways been an unmitigated disaster for japan, and threatens to further hobble a country already entering its third decade of stagnation. >>reporter: tetsu nakajima runs a tiny rice shop in tokyo, that has been in his family for over half a century... >>... he mills the grain every day... brimming with pride as he handles a product regarded not only as quintessentially japanese - but even sacred... >>nakajima: rice does have special meaning to us. rice is god! the bounty of
the heavens, brought tous by human hands. >>reporter: that reverence has translated into unwavering political support for japan's rice lobby... farmers enjoy subsidies and steep barriers to all but a trickle of imports... >>...even so, the heavens have not been smiling on japan's antiquated and cloistered agriculture sector... >>kingston: about 60 pct of farmers are over 65. and about two-thirds of farmers are now part time. so you don't have many young fulltime farmers in japan. what you have are a lot of small, inefficient uncompetitive producers. >>craft: i am in kasumigaseki, the heart of japan's bureaucracy. behind me is japan's ministry ofagriculture... and right next door, japan's trade ministry. despite the geographical proximity, in terms of mind set the two
ministries couldn't be further apart. the farm bureaucracy says that undera free trade regime the japanese farmers would go extinct. the trade ministry bureaucrats says the entire economy is being held hostage to the interests of a farming sector that accounts for a mere one percent of national gdp. >>reporter: there is a heightened sense of urgency now... with seoul moving aggressively to sign regional free trade deals, japanese companies fear being left at a severe price disadvantage to their korean rivals. >>kingston: most experts realize that that what japan needs is to consolidate their farmers. too many lilliputian plots that are not efficient, not competitive, so if you want to improve efficiency and revitalize the japanese agricultural sector, you need to promote consolidation, large-scale farms, which would bring down price of production, and make j agric products cheaper at home, but also perhaps competitive in export markets.
>>reporter: experts say the quasi-governmental agri-cooperatives, known as ja, have blocked effortsto weed out part-timers, and have vested interests in supporting many small farms. >>honma: for ja, the matter is numbers, rather than agricultural strengthening. so they maintain membership, five million, to maintain numbers is first priority for them. >>reporter: even rice dealers like tetsu nakajima say japan's agricultural policy is killing farming... >>nakajima: the govt should stop protecting agriculture - lots of farmers think so, too. you just don't hear it on the news. >>reporter: analysts say protectionism is a relic of a distant era of food shortages... >>ohsawa: in the 1960s,
agriculture demand exceeded supply - whatever farmers grew, sold. but now the situation is reversed. so farmers need to be able to explain their selling points, and get customer feedback. that system doesn't exist now. but if it does, japanese agriculture would take off. >>reporter: ironically, japan's refusal to join free-trade pacts like the trans-pacific partnershipagreement, or tpp, is a bad deal even for the farmers it's supposed to be protecting... because millions of part time farmers earn most of their income from manufacturing jobs... >>honma: not only agricultural sector, but also industrial sector is sinking, declining. that meansfor the agricultural farmers, most of their income is coming from
non-agricultural sectors. so their income itself is reducing. if we are not catching up with tpp or fta, in world trade. >>reporter: rice distributors like nakajima see a better way... specially trained, he is a so-called rice "meister," and can wax eloquent on the subtle flavor notes between hundreds of varieties of white rice, which vary even from paddy to paddy... >>... he and others are confident that high-quality japanese rice can hold its own in a free market,here or overseas... the question is when politics will allow farmers a chance to do so. >>abirached: crazy golf, a once tired mainstay of the british seaside, is making a resurgence, withdozens of new courses opening up from seaside to city centre. as the craze continues to spread across
the globe, we catch up with some of the world's top pros at the crazy golf world championships. >>reporter: the "creme de la creme" of crazy golf battled it out on the hastings seafront. >>reporter: founded in 2003, the crazy golf world championships is a key fixture on the international minigolf calendar. where 54 of the world's top players compete for the $5000 prize fund on one ofthe world's toughest courses... >>reporter: and despite this little sport's small scale, it has a global reach. >>homer: it's always been very big in europe particularly in the northern european and scandinaviancountries, but you're seeing a lot of interest now in asia and the far east, so the china asian open is the first one
that is bringing players from all over the world. >>aho: in germany it is very popular, they estimate 20 million rounds are played per year by just normal people who go playing minigolf. they have some 5000 active tournament players. finland it's a little bit smaller we have about 200 players. >>reporter: the huge physical challenges not withstanding, it is a sport that is open to all. the czech republic's olivia prokobova has just returned as runner-up from the us masters: >>prokobova: i travel all over the world, usa, china, sweden, many, many country. >>reporter: great. all for minigolf? >>prokobova: yes. >>reporter: what's more, crazy golf is getting a much racier image these days, partly on account ofa huge upswing
in business. >>hartley: over the five years it's been a steady increase in numbers that started with the construction of the new adventure golf. the site has always been popular but since we've built the adventure golf it's taken on a new lease of life and our numbers since 2002 have probably gone up about 50%. >>reporter: even though developments like this new pirate themed course might cost a surprisingly large amount of money, projections of a further 20% increase should go a fair way to making it pay. >>richards: we know the site here, we know how good it is so were prepared to put a little more in,so the special effects on this site alone are going to be $190,000. the total investment here is going to be $6-700,000 for one 18 hole golf course as opposed to eight and a half for two. >>reporter: this development is just one of many such new openings over the last two years:
>>milns: crazy golf is as much a part of the fabric of the british seaside tradition as sticks of rock, fish and chips and fairground rides, but today it's new breed of adventure golf courses is not only drawing in new business, but new destinations as well. >>homer: we're seeing a lot of new indoor courses in some of the major cities, courses in birmingham, manchester, liverpool, glasgow, bristol. all of which have popped up in the last 12-18 months soa lot of new courses in bringing a lot of new people into the game. >>reporter: many of which have been built by adventure golf developments in partnership with leading us operator, castle golf. >>richards: we've done about 10 or 11 over here in the last three years we've been doing three complexes a year, two outdoor, one outdoor is what we've been averaging, with several lined up for next year so hopefully we'll be busy again through next year. >>reporter: judging by the return on investment that these courses are generating, that future looks assured.
>>richards: you are really looking at $7-$800,000 for a complete 36 hole set up. indoor sites can go a lot more than that because of all the air conditioning, sprinkler systems that are needed. that is a fair bit of investment to start with but most of the guys we've been doing it for are looking at about 18 months to 2 years return on it and they're doing quite good. >>reporter: indeed, the numbers are impressive. >>tomkins: if we are talking the middle of august, we've got three courses running, were going fullsteam and the weather is looking good, we can get anywhere up to 1500 players but i have to stress you that's in the middle of august when the schools are off... across the season as a whole we are looking at to 90 to 100,000 players. >>reporter: but enough of the everyday hackers - what does it take to be a crazy golf world champion? >>davies: it is being mentally prepared. fortunately i am mentally prepared, and knowing the course. the essential thing when you get the course and start playing is to play the correct weight of shot. that is the essence of all
putting in my mind. >>milns: to be a true crazy golf contender then that you've got to have 100% focus, nerves of steel, a steady pair of hands and more than a little bit of local knowledge. >>harding: you've got to come down a day or two before and do the research. this week we go aroundeach hole, we sort of map it so you know wherever you end up you are aiming left edge right edge. it saves you a few good shots on each round. >>reporter: wise words, and its advice that even the world's best golfers may like to ponder if they were ever to take up the gauntlet of a crazy golf challenge: >>hartley: we've laid out the challenge for tiger woods. he hasn't responded. we reckon that many of our players here in the tournament could take him on miniature golf. ... put some of our top miniature golf players against the likes of tiger woods and lee westwood will be a very
interesting concept, yeah. >>reporter: admittedly that's a long shot, but until then thousands of amateur crazy golfers will be putting [sic] in the practice, from city centres to windswept coasts. >>abirached: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.